BYD has announced a strategic cooperation agreement with Changan Automobile to jointly manufacture batteries for electric vehicles.

The agreement will see both companies collaborate in the production and sale of these batteries through a new legal entity based in Chongqing, a 'megacity' of 33m people in central China.

Both companies plan for the total battery production capacity of 10GWh to be staggered over two phases, with the first stage estimated to amount to 5-6GWh and the second stage 4-5GWh.

"This strategic agreement marks a significant milestone in the way BYD conducts its supply and marketing. Today's announcement has implications for the company's battery business and the long term development of the entire organization," said BYD President and Chairman Wang Chuanfu.

BYD, which began as a battery manufacturer in 1995, says it plans to accelerate its battery manufacturing business and cement its industry position by working with domestic and international OEMs to sell new energy vehicle batteries, establishing joint ventures and attracting strategic investments.     

"This cooperation not only serves as a model of industry cooperation, it also sets a new benchmark for China's smart car and new energy vehicle industry," said President of Changan Automobile Zhu Huarong.

"We will pave the way for a revolution in the global automobile industry, one that is smarter and greener."

In addition, both companies intend to jointly research autonomous driving and a wide range of new energy vehicle technology. This includes the recycling of electric vehicle batteries, fast charging technology, and other future battery technologies. They also plan to improve on supply chain and car assembly techniques.

BYD and Changan Automobile have agreed to collaborate on their overseas presence as well by exploring the possibility of starting a knockdown factory, distribution channels and services. In the meantime, BYD new energy vehicles will be advertised on Changan Travel, a car-sharing platform established by Changan Automobile.